Ref C revenue a boon for state

$300 million of excess funds will boost capital projects, transportation

Ann Imse, Rocky Mountain News

Tuesday, October 31, 2006

The state collected $300 million more under Referendum C during fiscal year 2006 than the legislature expected when it set the budget last spring.

That brings to $1.116 billion the total taxes that Ref C allowed Colorado to keep for the year that ended in June. It is money that otherwise would have been returned to taxpayers under the Taxpayer's Bill of Rights.

According to Colorado's complex budget laws, that extra $300 million automatically is split into $200 million for transportation and $100 million for capital projects, said Henry Sobanet, the governor's budget chief.

State Rep. Jim Kerr, R-Jefferson County, said called it a "major increase" over expectations.

House Speaker Andrew Romanoff, D-Denver, hailed the announcement.

"The good news is we're back" economically, said Romanoff, one of the architects of Ref C.

As it happens, he noted, $1.1 billion is exactly the amount of tax revenue Colorado lost during the recession and could not recover as long as TABOR remained in force.

"There's a multibillion-dollar backlog in road and bridge repairs," he said. "More roads and bridges will get fixed."

Sobanet could not immediately calculate how much the average taxpayer would have received in the TABOR sales tax refund. That's because a good part of the $1.116 billion would have been returned to taxpayers in 15 other tax breaks, for things ranging from child care to capital gains.

The auditor's office said revenue jumped because personal and corporate income taxes rose, a one-year corporate tax break expired and oil and gas severance taxes leaped by 54 percent. The state also earned more on its money, as interest rates rose from 3.2 percent to 3.9 percent on average.

During the 2005 Ref C campaign, critics said the measure would keep more money from taxpayers than the $3.7 billion projected over five years. Sobanet's latest estimate over five years is $3.9 billion, counting the actual figure for 2006 and assuming there will be a recession by 2010, which Sobanet does.

Dan Hopkins, spokesman for Republican Ref C proponent Gov. Bill Owens, predicted the total could still be $3.7 billion by the time the five years is up, in 2010.

Campaign literature last year promised the Ref C money would be divided among K-12 schools, higher education and health care. The actual language of Ref C allowed it to be spent on those three items plus transportation and police and fire pensions.

The legislature spent all of the $815 million it expected for 2006 in these five areas and nearly all of it on the three priorities promised - K-12, higher ed and health care.

The state transportation commission will allocate the $200 million, but spokeswoman Stacy Stegman could not determine late Monday if that is in addition to the $536 million that transportation already expected to spend in 2007 from Ref C.

Last week, the commission decided to spend $90 million of unanticipated Ref C funds on paving worn-out roads, $45 million rebuilding the Interstate 25 interchange for Fort Carson and $10 million on various transit projects, she said.

The $100 million for capital construction will be allocated by the legislature in January, and Sobanet predicted it would go to multiyear projects already under way, such as a new maximum-security prison, a mental hospital for inmates and college buildings.

Romanoff said he'd like to see some go to repairing crumbling local schools.

Exceeding expectations in '06

Colorado has collected $300 million more of Ref C money than it projected last spring, when the legislature set the budget, for a total of $1.116 billion.

Where the 2006 Ref C money is going, legislature's allocation:

• K-12 education: $261 million

• Health care: $261 million

• Colleges: $253 million

• Fire, police pensions: $29 million

• Transportation: $10 million

• Total: $815 million

Where the extra money is going, allocated automatically under state law:

• Transportation: $200 million

• Capital construction: $100 million

• Total: $300 million

Note: Figures are rounded. Sources: State auditor, Legislative Council, governor's budget office